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Fair Value Measurement and Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2024

Schedule of Financial Assets (Liabilities) Measured at Fair Value on a Recurring Basis

The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2024 and 2023:



	Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2024
($ in thousands)	Level 1		Level 2		Level 3		Total Fair Value
AFS debt securities:
U.S. Treasury securities	$	638,265	$	—	$	—	$	638,265
U.S. government agency and U.S. government sponsored enterprise debt securities	—		262,587		—		262,587
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities (1):
Commercial mortgage-backed securities	—		426,214		—		426,214
Residential mortgage-backed securities	—		7,738,260		—		7,738,260
Municipal securities	—		250,153		—		250,153
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities	—		258,470		—		258,470
Residential mortgage-backed securities	—		433,608		—		433,608
Corporate debt securities	—		526,166		—		526,166
Foreign government bonds	—		233,880		—		233,880
Asset-backed securities	—		34,715		—		34,715
Collateralized loan obligations (“CLOs”)	—		44,493		—		44,493
Total AFS debt securities	$	638,265	$	10,208,546	$	—	$	10,846,811
Affordable housing partnership, tax credit and CRA investments, net:
Equity securities	$	20,817	$	4,204	$	—	$	25,021
Total affordable housing partnership, tax credit and CRA investments, net	$	20,817	$	4,204	$	—	$	25,021
Other assets:
Equity securities (2)	$	568	$	—	$	—	$	568
Total other assets	$	568	$	—	$	—	$	568
Derivative assets:
Interest rate contracts	$	—	$	385,311	$	—	$	385,311
Foreign exchange contracts	—		89,083		—		89,083
Credit contracts	—		1		—		1
Equity contracts	—		—		239		239
Commodity contracts	—		48,499		—		48,499
Gross derivative assets	$	—	$	522,894	$	239	$	523,133
Netting adjustments (3)	$	—	$	(427,292)	$	—	$	(427,292)
Net derivative assets	$	—	$	95,602	$	239	$	95,841
Derivative liabilities:
Interest rate contracts	$	—	$	414,172	$	—	$	414,172
Foreign exchange contracts	—		71,254		—		71,254
Equity contracts (4)	—		—		15,119		15,119
Credit contracts	—		12		—		12
Commodity contracts	—		45,328		—		45,328
Gross derivative liabilities	$	—	$	530,766	$	15,119	$	545,885
Netting adjustments (3)	$	—	$	(112,284)	$	—	$	(112,284)
Net derivative liabilities	$	—	$	418,482	$	15,119	$	433,601

Refer to footnotes on the following page.



	Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2023
($ in thousands)	Level 1		Level 2		Level 3		Total Fair Value
AFS debt securities:
U.S. Treasury securities	$	1,060,375	$	—	$	—	$	1,060,375
U.S. government agency and U.S. government sponsored enterprise debt securities	—		364,446		—		364,446
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities (1):
Commercial mortgage-backed securities	—		468,259		—		468,259
Residential mortgage-backed securities	—		1,727,594		—		1,727,594
Municipal securities	—		261,016		—		261,016
Non-agency mortgage-backed securities:
Commercial mortgage-backed securities	—		367,516		—		367,516
Residential mortgage-backed securities	—		553,671		—		553,671
Corporate debt securities	—		502,425		—		502,425
Foreign government bonds	—		227,874		—		227,874
Asset-backed securities	—		42,300		—		42,300
CLOs	—		612,861		—		612,861
Total AFS debt securities	$	1,060,375	$	5,127,962	$	—	$	6,188,337
Affordable housing partnership, tax credit and CRA investments, net:
Equity securities	$	20,509	$	4,150	$	—	$	24,659
Total affordable housing partnership, tax credit and CRA investments, net	$	20,509	$	4,150	$	—	$	24,659
Derivative assets:
Interest rate contracts	$	—	$	473,907	$	—	$	473,907
Foreign exchange contracts	—		57,072		—		57,072
Credit contracts	—		1		—		1
Equity contracts	—		—		336		336
Commodity contracts	—		79,604		—		79,604
Gross derivative assets	$	—	$	610,584	$	336	$	610,920
Netting adjustments (3)	$	—	$	(312,792)	$	—	$	(312,792)
Net derivative assets	$	—	$	297,792	$	336	$	298,128
Derivative liabilities:
Interest rate contracts	$	—	$	433,936	$	—	$	433,936
Foreign exchange contracts	—		42,564		—		42,564
Equity contract (4)	$	—	$	—	$	15,119	$	15,119
Credit contracts	—		25		—		25
Commodity contracts	—		121,670		—		121,670
Gross derivative liabilities	$	—	$	598,195	$	15,119	$	613,314
Netting adjustments (3)	$	—	$	(76,170)	$	—	$	(76,170)
Net derivative liabilities	$	—	$	522,025	$	15,119	$	537,144

(1)Includes Government National Mortgage Association (“GNMA”) AFS debt securities totaling $7.2 billion and $1.2 billion of fair value as of December 31, 2024 and 2023, respectively.

(2)Consists of exchange-traded equity securities. For additional information, see Assets and Liabilities Measured at Fair Value on a Recurring Basis — Equity Securities in Note 2 — Fair Value Measurement and Fair Value of Financial Instruments in this Form 10-K.

(3)Represents the balance sheet netting of derivative assets and liabilities and related cash collateral under master netting agreements or similar agreements. See Note 5 — Derivatives to the Consolidated Financial Statements in this Form 10-K for additional information.

(4)Equity contracts classified as derivative liabilities consist of performance-based RSUs granted as part of EWBC’s consideration in its investment in Rayliant.

Schedule of Reconciliation of the Beginning and Ending Balances of Equity Contracts Measured at Fair Value on a Recurring Basis using Significant Unobservable Inputs (Level 3)

The following table provides a reconciliation of the beginning and ending balances of these equity contracts for the years ended December 31, 2024, 2023 and 2022:



	Year Ended December 31,
($ in thousands)	2024		2023		2022

Derivative assets:
Equity contracts
Beginning balance	$	336	$	323	$	215

Total (losses) gains included in earnings (1)	(97)		(79)		17



Issuances	—		92		91



Ending balance	$	239	$	336	$	323
Derivative liabilities:
Equity contracts (2)
Beginning balance	$	15,119	$	—	$	—

Issuances	—		15,119		—
Ending balance	$	15,119	$	15,119	$	—

(1)Includes unrealized (losses) gains recorded in Lending fees on the Consolidated Statement of Income.

(2)Equity contracts classified as derivative liabilities consist of performance-based RSUs granted as part of EWBC’s consideration in its investment in Rayliant.

Schedule of Quantitative Information About Significant Unobservable Inputs Used in the Valuation of level 3 Fair Value Measurements

The following table presents quantitative information about the significant unobservable inputs used in the valuation of Level 3 fair value measurements as of December 31, 2024 and 2023. The significant unobservable inputs presented in the table below are those that the Company considers significant to the fair value of the Level 3 assets. The Company considers unobservable inputs to be significant if, by their exclusion, the fair value of the Level 3 assets would be impacted by a predetermined percentage change.



($ in thousands)	Fair Value Measurements (Level 3)		Valuation Technique	Unobservable Inputs	Range of Inputs	Weighted- Average of Inputs
December 31, 2024
Derivative assets:
Equity contracts	$	239	Black-Scholes option pricing model	Equity volatility	38% — 57%	50%	(1)
				Liquidity discount	47%	47%
Derivative liabilities:
Equity contracts (2)	$	15,119	Internal model	Payout % designated based on operating revenue and operating EBITDA of investee	84%	84%
December 31, 2023
Derivative assets:
Equity contracts	$	336	Black-Scholes option pricing model	Equity volatility	37% — 48%	45%	(1)
				Liquidity discount	47%	47%
Derivative liabilities:
Equity contracts (2)	$	15,119	Internal model	Payout % designated based on operating revenue and operating EBITDA of investee	84%	84%

(1)Weighted-average of inputs is calculated based on the fair value of equity contracts as of December 31, 2024 and 2023.

(2)Equity contracts classified as derivative liabilities consist of performance-based RSUs granted as part of EWBC’s consideration in its investment in Rayliant.

The following table presents the quantitative information about the significant unobservable inputs used in the valuation of Level 3 fair value measurements that are measured on a nonrecurring basis as of December 31, 2024 and 2023:



($ in thousands)	Fair Value Measurements (Level 3)		Valuation Techniques	Unobservable Inputs	Range of Inputs	Weighted-Average of Inputs
December 31, 2024

Loans held-for-investment	$	910	Fair value of collateral	Discount	50%	50%
	$	22,993	Fair value of collateral	Contract value	NM	NM
	$	37,583	Fair value of property	Selling cost	8% — 20%	10%	(1)

Affordable housing partnership, tax credit and CRA investments, net	$	5,000	Individual analysis of each investment	Expected future tax benefits and distributions	NM	NM

OREO	$	19,386	Fair value of property	Selling cost	8%	8%


December 31, 2023

Loans held-for-investment	$	16,328	Fair value of collateral	Discount	15% — 75%	45%	(1)
	$	3,009	Fair value of collateral	Contract value	NM	NM
	$	26,555	Fair value of property	Selling cost	8%	8%

Affordable housing partnership, tax credit and CRA investments, net	$	868	Individual analysis of each investment	Expected future tax benefits and distributions	NM	NM

NM - Not meaningful

(1)Weighted-average of inputs is based on the relative fair value of the respective assets as of both December 31, 2024 and 2023.

Schedule of Carrying Amounts of Assets That Were Still Held and Had Fair Value Changes Measured on a Nonrecurring Basis

The following tables present the carrying amounts of assets that were still held and had fair value adjustments measured on a nonrecurring basis as of December 31, 2024 and 2023:



	Assets Measured at Fair Value on a Nonrecurring Basis as of December 31, 2024
($ in thousands)	Level 1		Level 2		Level 3		Fair Value Measurements
Loans held-for-investment:




Commercial:
C&I	$	—	$	—	$	48,384	$	48,384
CRE:
CRE	—		—		1,678		1,678

Construction and land	—		—		11,316		11,316
Total commercial	—		—		61,378		61,378
Consumer:

Residential mortgage:
Single-family residential	—		—		108		108


Total consumer	—		—		108		108
Total loans held-for-investment	$	—	$	—	$	61,486	$	61,486
Affordable housing partnership, tax credit and CRA investments, net	$	—	$	—	$	5,000	$	5,000

OREO (1)	$	—	$	—	$	19,386	$	19,386

(1)Represents the carrying value of OREO property that was written down subsequent to its initial classification as OREO and is included in Other assets on the Consolidated Balance Sheet.



	Assets Measured at Fair Value on a Nonrecurring Basis as of December 31, 2023
($ in thousands)	Level 1		Level 2		Level 3		Fair Value Measurements
Loans held-for-investment:




Commercial:
C&I	$	—	$	—	$	22,035	$	22,035
CRE:
CRE	—		—		22,653		22,653


Total commercial	—		—		44,688		44,688
Consumer:
Residential mortgage:

HELOCs	—		—		1,204		1,204

Total consumer	—		—		1,204		1,204
Total loans held-for-investment	$	—	$	—	$	45,892	$	45,892
Affordable housing partnership, tax credit and CRA investments, net	$	—	$	—	$	868	$	868

Schedule of (Decrease) Increase in Fair Value of Assets for which a Nonrecurring Fair Value Adjustment Has Been Recognized

The following table presents the change in the fair value of certain assets held at the end of the respective reporting periods, for which a nonrecurring fair value adjustment was recognized for the years ended December 31, 2024, 2023 and 2022:



	Year Ended December 31,
($ in thousands)	2024		2023		2022
Loans held-for-investment:




Commercial:
C&I	$	(43,754)	$	(6,152)	$	(25,996)
CRE:
CRE	(78)		(1,183)		(7,098)

Construction and land	(2,289)		—		—
Total CRE	(2,367)		(1,183)		(7,098)
Total commercial	(46,121)		(7,335)		(33,094)
Consumer:
Residential mortgage:
Single-family residential	(1,392)		—		—
HELOCs	—		(40)		166
Total residential mortgage	(1,392)		(40)		166

Total consumer	(1,392)		(40)		166
Total loans held-for-investment	$	(47,513)	$	(7,375)	$	(32,928)
Affordable housing partnership, tax credit and CRA investments, net	$	(685)	$	(1,140)	$	469
OREO	$	(7,735)	$	—	$	—
Other nonperforming assets	$	—	$	—	$	(6,861)

Schedule of the Carrying and Fair Value Estimates Per the Fair Value Hierarchy of Financial Instruments Measured on a Nonrecurring Basis

The following tables present the fair value estimates for financial instruments as of December 31, 2024 and 2023, excluding financial instruments recorded at fair value on a recurring basis as they are included in the tables presented elsewhere in this Note. The carrying amounts in the following tables are recorded on the Consolidated Balance Sheet under the indicated captions, except for accrued interest receivable, restricted equity securities, at cost, and mortgage servicing rights that are included in Other assets, and accrued interest payable which is included in Accrued expenses and other liabilities. These financial instruments are measured on an amortized cost basis on the Company’s Consolidated Balance Sheet.



	December 31, 2024
($ in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	5,250,742	$	5,250,742	$	—	$	—	$	5,250,742
Interest-bearing deposits with banks	$	48,198	$	—	$	48,198	$	—	$	48,198
Resale agreements	$	425,000	$	—	$	329,769	$	—	$	329,769
HTM debt securities	$	2,917,413	$	499,858	$	1,887,896	$	—	$	2,387,754
Restricted equity securities, at cost	$	165,259	$	—	$	165,259	$	—	$	165,259

Loans held-for-investment, net	$	53,024,585	$	—	$	—	$	51,328,254	$	51,328,254
Mortgage servicing rights	$	5,234	$	—	$	—	$	8,822	$	8,822
Accrued interest receivable	$	316,392	$	—	$	316,392	$	—	$	316,392
Financial liabilities:
Demand, checking, savings and money market deposits	$	39,959,251	$	—	$	39,959,251	$	—	$	39,959,251
Time deposits	$	23,215,772	$	—	$	23,225,317	$	—	$	23,225,317


FHLB advances	$	3,500,000	$	—	$	3,497,953	$	—	$	3,497,953

Long-term debt	$	32,001	$	—	$	31,246	$	—	$	31,246
Accrued interest payable	$	61,950	$	—	$	61,950	$	—	$	61,950



	December 31, 2023
($ in thousands)	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	4,614,984	$	4,614,984	$	—	$	—	$	4,614,984
Interest-bearing deposits with banks	$	10,498	$	—	$	10,498	$	—	$	10,498
Resale agreements	$	785,000	$	—	$	699,056	$	—	$	699,056
HTM debt securities	$	2,956,040	$	488,551	$	1,965,420	$	—	$	2,453,971
Restricted equity securities, at cost	$	79,811	$	—	$	79,811	$	—	$	79,811
Loans held-for-sale	$	116	$	—	$	116	$	—	$	116
Loans held-for-investment, net	$	51,542,039	$	—	$	—	$	50,256,565	$	50,256,565
Mortgage servicing rights	$	6,602	$	—	$	—	$	9,470	$	9,470

Accrued interest receivable	$	331,490	$	—	$	331,490	$	—	$	331,490
Financial liabilities:
Demand, checking, savings and money market deposits	$	38,048,974	$	—	$	38,048,974	$	—	$	38,048,974
Time deposits	$	18,043,464	$	—	$	18,004,951	$	—	$	18,004,951
BTFP borrowings	$	4,500,000	$	—	$	4,500,000	$	—	$	4,500,000


Long-term debt	$	148,249	$	—	$	150,896	$	—	$	150,896
Accrued interest payable	$	205,430	$	—	$	205,430	$	—	$	205,430

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References + Details